Markets in anticipation of a deeper correction

Stocks fell on Wednesday, pulling back from record highs as investors took a pause to asses the trade situation and a batch of retail earnings.

Financials were the worst-performing stocks in the S&P 500, sliding 0.4%. Goldman Sachs and 3M led the Dow lower, dropping 0.9% and 1.4%, respectively. Those declines offset strong gains from retailers such as Target and Lowe’s.

Target shares jumped more than 11%, on pace for their biggest one-day gain since Aug. 21, after the retailer posted quarterly results that easily beat expectations. Target also raised its full-year profit outlook. Lowe’s advanced 5.8% on stronger-than-forecast earnings and an improved profit forecast for fiscal 2019.

The Wall Street Journal reported, citing former Trump administration officials, that the ongoing trade talks could hit an impasse that would derail a so-called phase one trade deal. Uncertainty around trade also grew after the Senate passed a bill supporting Hong Kong protesters. This led China to accuse the U.S. of interfering in domestic affairs.

The news follows President Donald Trump saying on Tuesday he would impose higher tariffs on Chinese goods if Beijing does not make a deal on trade. “If we don’t make a deal with China, I’ll just raise the tariffs even higher,” Trump said at a Cabinet meeting.

Traders were also keeping an eye on the impeachment proceedings in Washington. They did not believe the hearings were currently weighing on the market as a Senate conviction remains unlikely. However, the hearings could impact Trump’s 2020 election polls.

Source: CNBC

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